The leaders of the congressional committees that oversee trade policy have asked the International Trade Commission to organize a list of all goods that relate to the response to the COVID-19 pandemic, with their tariff rates, any additional tariffs, and any tariff exclusions on those goods. They also want to know how much of these goods are imported from which countries -- and they want all the data by the end of the month. Senate Finance Committee Chairman Chuck Grassley, R-Iowa, told International Trade Today during a phone call with reporters April 7 that he'd like the tariffs to be eliminated on all the items the ITC identifies. He said assuming the study shows there were trade restrictions that interfered with the typical import patterns of these supplies, “That would be good ammunition to back up our argument.”
Export controls on masks used by medical workers -- an idea that had been floated (see 2004030063) -- have been averted, 3M announced the evening of April 6. The multinational company is producing 35 million masks a month in the U.S., and the president had said none of that production should be exported to Canada and Latin America, major recipients of that output. But now, the administration will address U.S. regulatory restrictions that prevented some Chinese masks from being used for medical workers, and 3M will import 166.5 million N95 masks, mostly from its China plant, over the next three months, the company said. “The plan will also enable 3M to continue sending U.S. produced respirators to Canada and Latin America, where 3M is the primary source of supply,” the press release noted.
Mexico's undersecretary for foreign trade said July 1 is the earliest the new NAFTA could go into effect, but also suggested that an August or September date of entry into force would be fine. Luz Maria de la Mora spoke on a webinar hosted by the Wilson Center's Mexico Institute on April 7.
Trade in products that are in severe shortage during the coronavirus COVID-19 pandemic accounted for 1.7% of world trade in 2019, according to a new report from the World Trade Organization. Although many of the medical products that are traded face no tariffs in many countries -- medicines rarely face a tariff, and they account for more than half the traded value -- there are goods that still face high tariffs. The WTO said the average applied tariff for hand soap is 17% and the average tariff on protective gear such as gowns, gloves and masks is 11.5%.
General Motors, noting that its financial resources are strained with a shutdown of vehicle manufacturing, asked the U.S. trade representative last week to lift Section 301 tariffs on eight components it will be importing from China to make ventilators in Kokomo, Indiana. The letter was posted at regulations.gov on April 2.
About 35% of air cargo capacity worldwide has disappeared with the sharp drop in international passenger flights, according to Randy Stanley, UPS vice president for supply chain operations. Stanley and other UPS executives held a webinar April 3 on how the COVID-19 pandemic response is affecting cargo shipments. “Demand has significantly exceeded available capacity, especially on the trans-Pacific trade lane,” said Vito Losurdo, vice president of procurement, referring to air cargo. He referred to the Federal Emergency Management Agency's “air bridge” efforts to rush personal protective equipment to the New York region.
The Canadian government has sent its letter to the U.S. and Mexico certifying it is ready for the USMCA date of entry into force, Deputy Prime Minister Chrystia Freeland announced April 3, but a top Mexican official said his country did not certify it was ready by March 31, which means a June 1 date of entry into force is out of reach.
As countries seek to acquire needed supplies of ventilators, masks and other protective gear, the deputy director for trade and agriculture at the Organization for Economic Cooperation and Development said that nationalizing production of these goods is not the answer for the next pandemic. Julia Nielson, who was speaking on a Washington International Trade Association webinar April 2, said, “I don’t think nationalization of supply has ever meant security of supply.” She said that countries may need to consider the inventories they hold, and redundancies in where they get goods, but that given the way this pandemic is spreading in waves, relying on one country, even your own, could be risky.
As importers wait to hear whether duties can be deferred for 90 days after goods enter the U.S., voices for and against the proposal are speaking out. Reports have said that the deferral would be on most favored nation (MFN), but not sections 301, 232 or 201 actions. President Donald Trump has been coy about whether he will support such a move, or when (see 2004010047).
When asked during a press conference about stories that he would approve a temporary deferral of some tariffs (see 2003310073), President Donald Trump said that an executive order hasn't been presented to him, “so therefore, it's false reporting.” Still, “if we’re going to do something, we’d -- I’d be glad to let you know,” he said. “There's nothing wrong with doing it. But we'll let you know,” he said March 31. If the deferral measures are approved, CBP is expected to limit its deferral to regular, taxes and fees (see 2003300035).